Bitcoin’s price index had a dramatic fall earlier today before stabilizing in the immediate future. The largest digital currency by market capitalization was sitting near its all time high level of $69k when the price index took a massive hit, bringing it down to $64k in no time. While it has stabilized around $65k at press time, there are several reasons why this could be a good thing for the long-term bull run and a rise to $80k and above.
The big reason behind the sudden drop in prices was a shakeup of derivatives exchanges. They made some changes and as a result, the funding rate turned healthy, resulting in some losses overall. The move was also a surprise for several newbies in the market who panicked hard and liquidated quickly. This resulted in a short-term selling frenzy which was in the end contained effectively. According to one trader on Twitter:
Why the $BTC pullback from 68k?
There was a massive increase in BTC margined futures open interest this afternoon (traders going long BTC with BTC as collateral).
No free lunch – these traders are in the process of being shaken out. pic.twitter.com/FHDJfEcrBV
— Dylan LeClair (@DylanLeClair_) November 10, 2021
Now, it seems like Bitcoin has gotten some of the buying pressure off of its heads and can look to target the $70k resistance more confidently in the near future. The digital currency is currently on a high overall and is looking to post new all time highs and possibly challenge a closing price of anywhere between $80k-$100k.
There is also some uncertainty around the cryptocurrency network’s latest consensus-based upgrade called Taproot. While other networks like Ethereum have upgrades every other months, the Bitcoin community is much more decentralized and thus, agreeing on a new update can take years. This is exactly what happened this time around and the index is now close to its first big upgrade since the SegWit fork back in September 2017. The sudden panic in the price levels may be because of that but it is a regular change in the underlying code and is expected to go smoothly in the coming days. The upgrade is also very useful as it will allow some smart contracts capability in the world’s largest crypto network and improve privacy. This will eat away some of the share of programmable networks like Ethereum, Solana and others and with it their respective market capitalizations. So, a little panic selling before the upgrade will result in newbies losing some value and more experienced traders gaining it.
Image Source: pixabay.com
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